Bongaigaon Refinery and Petro-chemicals Ltd. vs Commissioner of Income Tax

A.K. Patnaik, J.—Heard Dr. A.K. Saraf, learned counsel for the petitioner, and also Mr. G.K. Joshi, learned standing counsel for the income tax Department.

The petitioner''s case in this writ petition is that by an assessment u/s 143(3) of the income tax Act, 1961 for the assessment year 1996-97, the Assessing Officer disallowed some deductions claimed by the petitioner-company and raised heavy demand by way of tax from the petitioner after adjusting the pre-paid taxes. Aggrieved by the said assessment order and demand notice for the assessment year 1996-97 the petitioner preferred an appeal before the Commissioner of income tax (Appeals) Guwahati. The said appeal is pending before the Commissioner of income tax (Appeals). The petitioner filed an application u/s 220(6) of the income tax Act, 1961, before the Joint Commissioner of income tax, Assessment Special Range I, Guwahati, who was the Assessing Officer for stay of the demand. But by order dated March 16, 1999, the said Assessing Officer rejected the prayer of the petitioner for stay of the demand. In the circumstances, the petitioner filed a petition before the Commissioner of income tax, Guwahati, for stay of the demand pending disposal of the appeal, but by order dated March 22, 1999, the Commissioner of income tax rejected the said petition for stay of demand of the petitioner. The petitioner has now moved this court under article 226 of the Constitution for quashing the orders passed by the Assessing Officer on March 16, 1999, and the Commissioner of income tax, Guwahati, on March 22, 1999, rejecting the prayer of the petitioner for stay of demand.

Dr. Saraf, learned counsel for the petitioner, submitted that u/s 220(6) of the income tax Act, 1961 the Assessing Officer has discretion to treat the assessee as not being in default in respect of any amount which is in dispute in an appeal so long as the appeal remains undisposed of. He submitted that the discretion conferred on the Assessing Officer u/s 220(6) of the Act is a judicial discretion and has to be exercised by the Assessing Officer after taking into account all relevant circumstances and after applying his mind to the facts and circumstances of the case. He cited the decision of the High Court in Hardeodas Jagannath Vs. Income Tax Officer, Shillong, and Others, , in support of his aforesaid submission. He contended that since the Assessing Officer has not exercised his judicial discretion on the prayer of the petitioner for stay of the demand and has not recorded any reason in the impugned order dated March 16, 1999, this is a fit case in which the said impugned orders, should be quashed and the matter should be remanded back to the Assessing Officer for consideration of the prayer of the petitioner for stay of the demand in accordance with the said law as laid down by the court in the case of Hardeodas Jagannath Vs. Income Tax Officer, Shillong, and Others, . In this context, Dr. Saraf vehemently argued that the Assessing Officer has added an amount of Rs. 4,63,62,000 claimed by the petitioner on account of excess valuation of closing stock on the flimsy ground that the said claim is relatable to the subsequent assessment year.

Mr. G.K. Joshi, learned senior standing counsel of the income tax Department, on the other hand, submitted that since the appeal of the petitioner is pending before the Commissioner of income tax (Appeals), the proper course for the petitioner should have been to make a prayer before the Commissioner of income tax (Appeals) for stay of the disputed demand. He further submitted that although there is no specific provision in the income tax Act, 1961, or the Rules made thereunder conferring the power to stay a demand in dispute in the appeal on the Commissioner of income tax (Appeals), it has now been decided by the courts that the Commissioner of income tax (Appeals) as an appellate authority had the power to stay a demand which is in dispute in the appeal before him. He relied on the decisions of the Allahabad High Court in Prem Prakash Tripathi Vs. Commissioner of Income Tax and Others, and Tin Manufacturing Company of India Vs. Commissioner of Income Tax and Others, in support of his aforesaid submission.

In my considered opinion, since a remedy for interim relief pending disposal of the appeal filed by the petitioner is available to the petitioner as per the aforesaid decisions of the Allahabad High Court cited by Mr. Joshi, learned senior standing counsel for the income tax Department, the appropriate course for the petitioner would be to move the Commissioner of income tax (Appeals) Guwahati, for stay of the demand within a period of 15 days from today and in case an application is filed before the Commissioner of income tax (Appeals) within the aforesaid period of 15 days, the said Commissioner of income tax (Appeals) will consider the same in accordance with law and pass appropriate orders within a period of 15 days from the date of filing of such application by the petitioner. The Commissioner of income tax (Appeals) will apply his judicial mind to the facts of the case and pass orders on the stay application of the petitioner after hearing the petitioner. Till the Commissioner of income tax (Appeals) passes such orders on the application of the petitioner for stay, the demand in dispute before the said Commissioner shall remain stayed. It is made clear that in case no application is filed by the petitioner within the aforesaid period of 15 days as directed above, this stay order shall stand vacated.